D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C 4 key points on Bitcoin A Bitcoin is a peer-to-peer currency that is gaining momentum in multiple marketplaces. New and emerging companies are Bitcoin-centric and a handful of larger, established companies are experimenting with it. While it’s one of 70 digital currencies available, Bitcoin is generating considerable buzz and activity, even though it is not a government-backed currency or legal tender in the United States. So what should executives know about Bitcoin and its potential impact? Our point of view: 1. Bitcoin can be part of an innovation strategy for Risks and benefits for companies, consumers Benefits for companies • Low transaction fees • Daily cash outs • No payment reversals • Merchant tools exist to simplify experience Risks for companies entertainment companies are experimenting using Bitcoin for new music downloads. • Pseudo-anonymous transactions • No central entity backing it • Not legal tender in some countries • products, services and payment systems. Some Uncertain and evolving 2. Early adopters enjoy a public relations and marketing advantage. Being noted as a Bitcoin innovator can potentially generate favorable press and social media mentions. In 2014, social gaming company Zynga added Bitcoin to its most popular games and garnered thousands of media mentions. 3. The value of Bitcoin is frequently fluid and roller perspectives of regulators • Network security • Volatile trading market • Dynamic product pricing a must • Slow transaction processing time Benefits for consumers • coaster-like. Dynamic pricing of products is needed with daily cash-outs and a trusted payment partner. In the tourism sector, CheapAir.com has partnered with Bitcoin merchants to leverage those features. globally • Pseudo-anonymous transactions • Value fluctuations (when rising) • Financial institutions don’t control currency 4. Like other consumer-facing technologies, companies experimenting with Bitcoin should monitor the evolving regulatory landscape and execute due diligence to mitigate potential exposure to illicit activities. This PwC Consumer Intelligence Series report explores the emerging impact of Bitcoin on entertainment, media and communications companies. It is based on our analysis of Bitcoin’s 3.4 million online mentions in 2013 plus a PwCcommissioned online consumer survey to gather awareness, attitudes and behaviors about Bitcoin. Typically no fees to send Bitcoin Risks for consumers • No payment reversals • Complexity of buying Bitcoin • Complexity of cashing out • Niche adoption by major brands • Complexity of carrying a digital wallet • Uncertain and evolving perspectives of regulators 1 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Bitcoin’s evolution into a brand If it seemed like a lot of people were suddenly talking about Bitcoin in 2013, that’s because they were. Bitcoin had 3.4 million online mentions in 2013, according to our research, equaling General Motors and all of its brands during the year.1 Those conversations translated to media mentions, too; Bitcoin was the subject of some 11,200 traditional media stories in 2013.2 In November alone, it was featured in 14,179 online stories.3 Bitcoin’s growth has been swift: Two leading U.S. banks have met to discuss Bitcoin; one of them became the first U.S. institution to initiate official analyst coverage of the digital currency.4 Bitcoin’s growth has spawned a rash of supporting companies, including exchanges such as Mt. Gox and Cryptsy, which allow users to exchange Bitcoin into local currencies. There are startups for buying Bitcoin, such as CoinBase, which received $25 million in venture capital in 2013,5 as well as Coinmkt and Campbx. Other companies are creating digital wallets to store and use Bitcoin at brick and mortar locations. All of this growth signals that Bitcoin has grown into a brand, a decentralized one at that, supported by a digital ecosystem of entrepreneurship. The history of digital shows that when that ecosystems form, disruption follows. D A T A PO I N T S Bitcoin in social media 3,400,000 Number of social mentions ‘Bitcoin’ generated in 2013. Mentions occurred on social networks, microblogs, forums, mainstream news, images, videos and blogs. 96% male Percentage of gender mentioning Bitcoin. The majority of discussions happen in the United States and China, and participants are typically ages 26-50. 21% Percentage of Bitcoin mentions about online gambling and video games. 2013: The year of Bitcoin Source: Online mention data via Sysomos MAP, 2013 70% 60% November Bitcoin Black Friday/CyberMonday: 400 retailers join Bitcoin Black Friday website. Bitcoin nears value of ounce of gold. May Treasury crackdown on money laundering. Presidential candidate accepting Bitcoin donations. 600k 700k Neutral 50% April Chinese e-commerce market says it will accept Bitcoin. 40% 500k 400k Positive 30% 20% 10% March Speculation of new unregulated virtual currency and value. October Silk Road controversy. Bitcoin ATMs in Canada. Exchange launched in the United Kingdom. 300k Volume of mentions Sentiment 800k 200k Negative 100k 0% 0 Dec ‘12 J F M A M J J A S O N D ‘13 Source: Online mention data via Sysomos MAP, 2013. Note: While regulators have publicly stated they do not wish to stifle innovation, federal agencies continue to advance their own understanding of Bitcoin and its technology. It is likely that the regulatory environment for users, miners and exchangers will evolve over time. Companies considering Bitcoin should monitor regulatory developments and how they shape the market in coming years. 2 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C The open-source monetary system While Bitcoin quickly becomes part of the business vernacular, does it have what it takes for enterprise-level security? Since its release in 2009, Bitcoin has differentiated itself by solving for the nagging problem of double-spending, when one token is spent twice. The solution: A public ledger that logs every Bitcoin transaction, allowing users to agree on who owns how many Bitcoins at any time. Bitcoin has also seemingly solved for issues around online system security, too; each transaction is encrypted while all of its governing code is publicly accessible. Hundreds of developers voluntarily update and monitor the open-source code, contributing to its common good. As a digital currency, Bitcoin is not backed by physical commodities such as gold, or a centralized government authority and its credit; instead, it relies on peer-topeer distribution and trust in that network, which is nearly frictionless. That makes for a low-to-no fee system. With 1,000 brick-andmortar businesses and 10,000plus online merchants accepting Bitcoin, early adopters are creating roadmaps for the enterprise to understand and adopt the digital currency.6 The value of Bitcoin vs. gold $1,800 Gold $ / O December 11, 2013 (values in USD): Gold: $1,266.25 Bitcoin: $1,237.95 z. high Avg. Gold $ / oz. $1,200 2009: The first transaction using Bitcoin occurs. 2010: The tech news site Slashdot covers Bitcoin. 2011: One Bitcoin is valued at roughly $10. 2012: The Bitcoin Foundation is formed. 2013 At U.S. Senate hearings, Department of Justice calls Bitcoin a “legal means of exchange.” 2014: Overstock.com has 840 orders on first day of taking Bitcoin. The company estimates $500,000 worth of Bitcoin business since January 9. $800 Avg. Bitcoin $ $600 $200 2008: Bitcoin.org is registered. 2013: Canada and Slovakia introduce Bitcoin ATMs. $1,000 $400 A brief history of Bitcoin 2012 First Bitcoin exchange licensed as a bank in EU. $1,600 $1,400 D A T A PO I N T S 0% J 2013 B itc F oin $ H ig M 2014: Kings become first NBA team to announce Bitcoin acceptance. h A M J J A S O Source: The Wall Street Journal, “Bitcoin Vs Gold: A Tale Of Two Manias,” 2013. N D 2014: Canada and the Bank of France say Bitcoin isn’t legal tender. Source: PwC Research, 2014. 3 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Bitcoin: Digital payment disruptor Bitcoin’s value proposition includes global, peer-topeer money transfers, nearly anonymous payments, low transfer fees and higher-level security protocols based on open standards. Four types of organizations face increased challenges if Bitcoin continues its growth pattern as a digital currency: Banks, governments, payment processors and payment gateways. BitPay and BIPS are payment gateways for Bitcoin transactions, and they are creating merchant tools that enable online businesses to accept Bitcoin on hosted checkout pages, shopping carts and point of sale systems for brick and mortar stores. The upshot: transaction fees are typically low. Some Bitcoin merchant tools offer recurring billing and fees of 1% or less to cash out Bitcoin daily (see column on right). Bitcoin enables companies to skip the “middle man” of central financial institutions and their fees, not unlike how peer-to-peer file sharing of music enabled today’s consumers to download music from artists directly. Bitcoin is a bit like the 1999-era of Napster in that way, but today’s scenario involves consumers sending digital payments directly to other users, or companies with goods and services to sell, with minimal fees and no float time. Added to this proposition is that consumers who use a decentralized, peer-to-peer payment system can be shielded from fluctuations caused by local government politics and their influence on central banks. In this potential scenario, Bitcoin has the potential to disrupt currency models. Bitcoin may cause financial institutions to update or add to their current technologies, adjust fee structures, add services or new layers of specalists to monitor and understand governmental regulatory issues. D A T A PO I N T S Bitcoin fees vs. other fees Payment method transaction fees, from highest to lowest: 3.1% American Express 2.7%* Visa, MasterCard, Discover 2.9% PayPal 2.75% Square Free ** Coinbase Free *** BitPay 66 % of all point-of-sales transactions that are done with credit, debit, or gift cards. $6.9 trillion VISA 2013 users’ total dollar volume. Visa had the largest marketshare of all credit cards. 26.2 billion Total number of credit card transactions in the U.S. in 2012. 55,000 U.S. Government viewpoints on Bitcoin Government entity View on Bitcoin Securities and Exchange Commission Considering options on Bitcoin as a security. Commodities Future Trading Commission Considering options on Bitcoin as a commodity, or a “marketable good produced to satisfy wants or needs.” Internal Revenue Service Considering options on Bitcoin as a taxable currency. Treasury Companies deemed to exchange Bitcoin for traditional fiat currencies and vice versa as a business must register as money transfer businesses. Congress Considering the effect of Bitcoin on the Federal Reserve and weighing consumer protection options. Average number of Bitcoin transactions every day in 2013. Daily average was less than 100 in 2009. * Variable as set by the acquiror (bank). ** No fee for first $1 million in payment processing. After that, 1% charge. *** No transaction fee with $30 / month subscription. Sources: Kimbia.com Interview, 2013. Congressional Research Service, “Bitcoin: Q+A and Analysis of Legal Issues,” 2013. NerdWallet. com, 2011. BlockChain.info, 2013. CreditCards. com, 2013. Source: Congressional Research Service, “Bitcoin: Q+A and Analysis of Legal Issues,” 2013. 4 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Bitcoin growth and trust issues Successful traditional currencies typically have two success factors: They function as a medium of exchange and maintain their value over time. To maintain value, a currency must be trusted by those using it. A medium of exchange means a currency has to be divisible, easily transferable and valued. While Bitcoin is divisible and has an increasing number of way to spend it, including acceptance at online retailers such as Overstock.com, its value swung wildly in 2013.7 The value of one Bitcoin was relatively stable in 2011-12, averaging $5.44 and $8.29, respectively; 2013 was a rocket ship ride, reaching a high at one point of $1,147; it ended the year at $757 (all prices are in US dollars).8 Much like its fiat counterparts, Bitcoin’s value fluctuates on the market forces of supply and demand. However, as the currency becomes more mainstream and more Bitcoins are “mined,” its value will be based on actual transactions, not market speculation. That said, the same market forces causing fluctuations in value are also what’s driving the popularity, and trust, in the brand of Bitcoin. Another advantage of Bitcoin over traditional currency is the aforementioned public ledger. Called the “block chain,” it tracks every transaction in the Bitcoin network. Transactions are semi-anonymous and ultimately traceable. Bitcoin has many hurdles before it becomes mainstream, including an infrastructure of consumer-friendly services, regulatory hurdles, licensing regimes, governmental classification of the asset (commodity, security, asset or currency), as well as taxation, measurement and valuation. Those are some of its key challenges ahead. D A T A PO I N T S PwC survey results 42 % of all respondents understand the concept of Bitcoin. 4 % of all respondents are “very interested” in using Bitcoin. 49 27 22 49 % of all respondents are “not at all” or “not very interested” in using Bitcoin. % of the previous group cite Bitcoin’s lack of trust, security and regulation as why they are not interested. % of respondents say “nothing” would increase their interest in Bitcoin. % of total respondents would be more likely to trust Bitcoin if it were distributed by a well-known third party. Key points 1.2 trillion Consumer trust in banks The number of U.S. dollars in circulation in July 2013. 80% US consumer trust 11.3 million 60% 40% U K con ust sumer tr The number of Bitcoins in circulation in July 2013. 20% 0% 2007 2008 2009 2010 2011 2012 Sources: Survey data based on a December 2013 PwC survey of 1,000 geographically-diverse respondents. Sample size was 55% female and 45% male. Other: BlockChain.info, 2013. Board of Governors of the Federal Reserve System, “Money Stock Measures (H.6),” 2013. Source: Edelman Trust Barometer, 2012. 5 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Bitcoin & EMC: Entertainment sector Bitcoin for direct and global selling In 2013, the prospect of paying for albums, music and movies with Bitcoin drove awareness and positive online sentiment for the digital currency in the entertainment sector. Although no leading online music or movie platforms have announced Bitcoin acceptance, several alternative sites, such as CoinDL.com and Beatcoin. org, have been launched to allow Bitcoin-based purchases for downloads and streaming of music. As a payment platform, Bitcoin presents an opportunity for filmmakers, musicians, artists, authors, and other content creators to more easily sell their work directly to fans worldwide, bypassing a maze of country-based currencies, payment networks, gateways and distribution platforms. Given its no-chargeback model, Bitcoin makes global direct selling more attractive as a hedge against credit card fraud. Entertainment companies or studios could partner with Bitcoin-accepting services such as Soundcloud or CoinDL, which are audio platforms that enable performers to upload and promote songs. Filmmakers and other content producers are petitioning Indiegogo and Kickstarter to use Bitcoin for crowdsourcing-based funding.9 Larger content companies and their partners may find value in experimenting with Bitcoin as a payment system for specific songs, albums or campaigns, especially with artists who have global, techsavvy followings. It’s also an opportunity to partner with or acquire entertainment startups that build momentum with Bitcoin. As with any new innovation, especially a digital one, there are gray markets. Modern content creators are constantly concerned with piracy; while a Bitcoin transaction is semi-anonymous, its public ledger system allows sophisticated law enforcement agencies to track transactions to IP addresses.10 How digital wallets work with Bitcoin: Buying movie tickets Customer has a smartphone with a digital wallet app installed, and goes to a movie theatre that supports Bitcoin transactions. To buy a ticket, customer uses phone to scan a Bitcoin QR code on the point of sale machine that matches the price of the ticket. The Bitcoin network sends money from the customer’s online Bitcoin tally to the theatre’s account. On average, this takes ten minutes or less. D A T A PO I N T S Bitcoin in social media 2 % of all 2013 online Bitcoin mentions involved entertainment. 91 % favorable mention sentiment. PwC survey results 17 % of all respondents are “very interested” or “interested” in using Bitcoin for internet transactions. Key points $479 billion 2012 revenue generated by the United States’ entertainment and media industry. $632 billion Predicted 2017 revenue generated by the United States’ entertainment and media industry. Early innovators Artist (and Spice Girl) Mel B made her single “For Once in My Life” available to purchase for 0.0012 Bitcoin as of Dec 2013. BitTorrent, in its new business model as a legitimate content provider, is integrating Bitcoin into its system, encouraging content creators to share music with fans in exchange for Bitcoin. It may also integrate Bitcoin metadata into its code, potentially open-sourcing innovation among the two protocols. BitTorrent’s protocols generate roughly 40% of the world’s internet traffic each day. Sources: Online mention data via Sysomos MAP, 2013. PwC’s “2013-2017 Global Entertainment and Media Outlook,” 2013. Source: PwC Research, 2013. 6 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Bitcoin & EMC: Media sector Going beyond the paywall In 2013, media companies began to experiment with Bitcoin. Paywall technology was a logical first choice. The ability to wall off certain content for those willing to pay for it is enhanced by the digital nature of Bitcoin and its divisibility. Bitcoin could make it possible to charge the equivalent of pennies, or nickels, for a la carte content. Bitcoin reduces multiple currency exchange needs with global audiences and out-of-country fees often charged by credit card companies for purchasing goods and services beyond the consumer’s home country. Has Bitcoin usage spread sufficiently to make paywalls and micropayments viable for media companies? The Chicago Sun-Times, the ninth largest newspaper in the United States, will test that theory with its paywall in early 2014.11 In the meantime, PwC survey results show that nearly half of the U.S. public is aware of Bitcoin, but have yet to understand its technical aspects, which hinders trust. (See column at right). PwC survey results 15 % of respondents who were “not interested” in Bitcoin said they would “need to know more about Bitcoin” before they would consider using it. Micropayments has been a long-imagined and researched future for companies that wish to offer content a la carte, but transaction fees have hindered deployment for anything sold for less than $1. In lieu of daily or monthly subscriptions, 2013: Bitcoin mentions in U.S. mass media D A T A PO I N T S Bitcoin in social media 3 % of 2013 online Bitcoin mentions involved media companies. 95 % favorable conversation sentiment. PwC survey results 44.5 % of consumers aged 18-34 are aware of Bitcoin. Key points 42 6 % of people who correctly identified Bitcoin as a virtual currency during a 2013 Bloomberg survey. % of people from Bloomberg survey who incorrectly identified Bitcoin as an Xbox video game. 3,000 94 2,400 Early innovators 1,800 IAC, the parent company of OKCupid.com, accept Bitcoin for subscriptions and premium features. 1,200 TheDishDaily accept Bitcoin for various levels of access and subscriptions. % of people skip pre-roll advertisements when browsing the internet. Reddit Gold customers can pay with Bitcoin to access extra features and gift “gold” to other users. 600 0 J F M A M J J A S Source: BBC News Magazine, “Bitcoin: Price v hype,” 2013. O N Sources: Online mention data via Sysomos MAP, 2013. PwC Survey, 2013. Bloomberg, “Most Americans Don’t know Bitcoin While some Guess Xbox,” 2013. eConsultancy, “Pre-roll video ads: is it any wonder why we hate them?,” 2013. 7 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Bitcoin & EMC: Video game sector Bitcoin driving digital downloads Our research finds that Bitcoin awareness and usage is healthy among men aged 25-40. Given those demographics, video game companies have good potential for benefiting from integrating Bitcoin into their product and payment strategies. Some niche video gaming companies are experimenting in the space, such as Hundle Bundle, PC Game Supply and Ouya by using Bitcoin as payment for special game or console offerings (see column at right). Companies in this space have the advantage of measuring purchase and loyalty rates of users who pay with Bitcoin vs. traditional payment systems. Mobile gaming companies are well-suited to accept and integrate Bitcoin into their offerings, given their lack of brick-and-mortar sales. Larger video game companies could incorporate in-game Bitcoin micropayments into their game engines. Specialized video games that use Bitcoin as a theme could be devised, given that Bitcoin awareness and understanding remain relatively low. Bitcoin seems to make sense for existing online video game economies, where players theoretically cash out existing in-game currency for Bitcoin, or vice versa. While most virtual, in-game currencies can’t be cashed out for real-world currency, Bitcoins can be traded for dollars.12 Video game companies could build their own, gamebased exchange markets or partner with companies for exchange markets that create virtual tools, add-ons, avatars and themes. D A T A PO I N T S Bitcoin in social media 9 83 % of 2013 online Bitcoin mentions involved video games. % favorable conversation sentiment. This sentiment level is noticeably lower than other industries in the report, which average at 93.5% favorability. PwC survey results 82 % of consumers concerned with fluctuation in the Bitcoin market. Key points 13 Average number of hours people in the U.S. play video games per week. $112 billion Projected 2015 revenue for the global video game industry. It was $74 billion in 2011. Case study: Zynga Early innovators Zynga is an online social gaming company that has faced increased competition, loss of players on social networks and challenges porting its games to mobile devices. Zynga’s active daily users went from a high of 72 million in 2012 to 30 million in 2013. In January 2014, it announced Bitcoin global acceptance in their games FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows and CityVille. Potential benefits: Improved profitability due to lower transaction costs for in-game purchases of virtual goods, publicity and social media word-of-mouth exposure, closer alignment with core Bitcoin demographics. Potential challenges: Extending Bitcoin to mobile devices could prove challenging since Bitcoin wallet apps have been rejected from several leading app stores. Source: TechCrunch, “Zynga Links Up With BitPay For A Bitcoin Payment Test,” 2014. Zynga Game Network, 2013. Inside Network Survey, 2013. Humble Bundle accepts Bitcoin for video game packages under a name-your-own pricing model. It splits the profits with developers and nonprofits. PC Game Supply accepts Bitcoin for digital delivery and for game bundles under a name-your-own price model. The State of New Jersey settled with a online video game company for $1 million amid accusations of the company stealing Bitcoin from video game players using malware. Sources: Online mention data via Sysomos MAP, 2013. GameSpot, “Time spent gaming on the rise,” 2010. Gartner, “Forecast: Video Game Ecosystem, Worldwide, 4Q13,” 2013. ZDNet, “Video game firm settles Bitcoin mining dispute for $1 million,” 2013. 8 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Bitcoin & EMC: Travel and tourism sector Bitcoin as a loyalty driver Since Bitcoin’s global and decentralized digital infrastructure is not tied to country-specific currencies, travel and tourism companies could experiment with Bitcoin on multiple fronts. Tourism and vacation companies could use Bitcoin to supplement traditional payment systems, making it easier for out-of-country tourists to make reservations. Airlines could accept the digital currency for domestic flight purchases in the United States (or low space orbit; see column at right). They could also integrate QR codebased Bitcoin accounts into mobile apps, experimenting with in-flight payments, hospitality lounges or selling frequent flyer miles or points. Bitcoin could be offered as an enhancement to traditional loyalty programs such as miles or reward points. Leading-edge resorts could experiment with Bitcoin as part of their payment systems, whether for in-room services, tours or in conjunction with mobile devices and special attractions. For companies wanting to attract technologysavvy consumers, being Bitcoinfriendly could enhance loyalty numbers. Few large companies in the sector have publicly revealed Bitcoin plans, so early innovators are likely to attract traditional and social media buzz. The travel and tourism industry is poised to face an onslaught of wearable technology that helps users better understand location and context, or personal telemetric data associated with tourism. That means travelers will be more digitally-savvy, presenting opportunities for companies to use Bitcoin to offer real or virtual products, tools and services associated with travel experiences. Have Bitcoin, will attempt to travel A Utah couple completed a 101-day trip across three continents using only Bitcoin. The couple described the experiment as “frustrating, but never impossible.” They used Bitcoin to pay for rent, groceries, pizza, rental cars and booking flights with a German travel agency. The couple traveled to: Provo, US Chicago, US Kansas City, US Pittsburgh, US New York, US Berlin, DE Stockholm, SE D A T A PO I N T S Bitcoin in social media 1 100 % of 2013 online Bitcoin mentions involved travel and tourism. % favorable conversation sentiment. PwC survey results 49 % of consumers are “not interested” in using bitcoin for purchases online. Key points $129 billion Travel-generated tax revenue to all governments. 60 million Number of new travelers entering the world travel market between 2000 and 2010. $1.4 trillion Value of global tourism industry in 2013. Revenue grew an annualized 2.5% over past 5 years. Early innovators Virgin Galactic to accept Bitcoin for suborbital spaceflights in 2014. Virgin Airlines may accept the currency afterward. CheapAir.com accepting Bitcoin for flights. SimplyTravelOnline.com allows booking hotels, rental cars and flights with Bitcoin. Source: The Wall Street Journal, “Bitcoin Couple Travels the World Using Virtual Cash,” 2013. Sources: Online mention data via Sysomos MAP, 2013. U.S. Travel Association, 2013. IBISWorld, 2013. PwC Research, 2013. PwC, “PwC Hospitality Directions: Q3 2013,” 2013. 9 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Bitcoin & EMC: Telecom and Internet sector Opportunity for early innovators Telecoms in markets where bank accounts are sparse or underserved could have the most immediate impact with Bitcoin, primarily as a banking substitute. In Kenya, billing providers teamed up with telecom M-Pesa to develop a Bitcoin platform for money transfers.16 Called Kipochi, it’s considered a lightweight version of a Bitcoin digital wallet. In Belgium, telecom operator Mobile Vikings is accepting Bitcoin for credits on accounts or to purchase new SIM cards and giftcards.17 The payment choice was driven by subscriber requests. “We try to listen to our community as much as possible, so that’s why we decided to implement it,” said chief marketing officer Dorien Aerts in an interview with Coinbase.com. China’s government and several Chinese telecom companies had a significant impact on Bitcoin’s valuation in 2013 (see box below), but some decisions have made China’s acceptance of Bitcoin uncertain. For telecom companies, incorporating Bitcoin into existing VOIP services (or new ones) may make sense for early experimentation. HushVoice, a U.S.-based VOIP service, promises global calls with bank-level encryption when it launches in 2014.18 Bitcoin will be its payment engine. Systemwide, a peer-to-peer digital currency like Bitcoin will likely require updates to telecom payment infrastructure and mobile carrier technology, along with navigating multiple regulatory issues. Bitcoin had wild fluctuations in its value in throughout 2013, driven by speculation on Chinese markets, the news media and the People’s Bank of China declaring it illegal for banks to use. When that happened in November, Bitcoin fell $300 USD soon after. Jiangsu Telecom accepts Bitcoin as a part of a promotional effort. News inaccurately reports parent company “China Telecom” is accepting Bitcoin. BTC China becomes world’s largest Bitcoin exchange. Oct Nov People’s Bank of China makes initial negative comments on Bitcoin. Bitcoin in social media 1 % of 2013 online Bitcoin mentions involved internet and telecom. 100 % favorable conversation sentiment. PwC survey results 41 % of consumers ranked security as a top benefit to Bitcoin. Key points $2.2 trillion Predicted 2013 revenue for global telecommunications industry. 63% Bitcoin fluctuations via news in China Chinese search engine Baidu accepts Bitcoin for its security service. D A T A PO I N T S Baidu announces it will no longer accept Bitcoin. The search engine marketshare held by China’s Baidu in 2012. Early innovators Coinapult is a company that allows customers to direct Bitcoin transfers to mobile phone numbers. It moved operations to Panama to focus on non-U.S. customers. BahtCoin is a fixed-rate Bitcoin exchange based in Thailand. With BahtCoin, Bitcoins can be used to purchase mobile phone prepaid cards. China’s central bank bans financial institutions from handling Bitcoin. Dec Bitcoin value drops $300 USD in one day. Jiangsu Telecom removes all references to Bitcoin. Sources: Online mention data via Sysomos MAP, 2013. Insight Research Corporation, “The 2013 Telecommunications Industry Review,” 2013. SearchEngineLand, “B2B Marketer’s Guide to Baidu SEO,” 2014. BahtCoin.com, 2014. Source: Bloomberg, “China Bans Financial Companies From Bitcoin Transactions,” 2013. CNBC, “Baidu division now accepting bitcoins,” 2013. Mashable, “Bitcoin Prices Plunge...,” 2013. PwC Research, 2014. 11 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Appendix: Data from PwC survey on Bitcoin Familiarity with Bitcoin (Breakdown by age group) What best reflects your knowledge of Bitcoin? (Know what it is and have used it at least once) Know what it is and have used it at least once Know what it is but have not used it Heard something about it Never heard about it Base: Total Respondents (1000); 18-24 (195); 25-34 (310); 35-49 (388); 50-59 (107) Base: Total Respondents (1000); 18-24 (195); 25-34 (310); 35-49 (388); 50-59 (107) How interested are you in using Bitcoin for: (Somewhat - Very Interested) How interested are you in using Bitcoin for Internet purchases with your phone, tablet, or laptop? Very Very Interested Very Interested Interested Somewhat Somewhat Somewhat Not very Not very Not very Not at all all Not atat Not all Base: Total Respondents (1000) Base: Total Respondents (1000); 18-24 (195); 25-34 (310); 35-49 (388); 50-59 (107) What do you see as the top five benefits of using Bitcoin for your purchase / sale transactions? How willing are you to actually use Bitcoin to conduct Internet purchase / sales transactions? Helps protect identity while making payments Easily conduct worldwide transactions 7% No one can charge or pay on your behalf Not at all all Not atat Not all 10% Control over money & fraud protection Not very Not very Not very 11% Fast transactions Somewhat Somewhat Somewhat 12% Instant peer-to-peer transactions; no central authority or bank involvement Very Very Interested Very Interested Interested 15% 5% Base: Total Respondents (1000) Base: Total Respondents (1000); 18-24 (195); 25-34 (310); 35-49 (388); 50-59 (107) 12 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Appendix: Data from PwC survey on Bitcoin What would be the top five benefits to using Bitcoin for your purchase / sale transactions? Helps protect your identity while making payments / purchases Easily conduct worldwide transactions / payments Instant peer-to-peer transactions - no central authority or banks Fast transactions - funds received are available for spending within minutes Bitcoin can give you control over your money and a strong level of protection against many types of fraud No one can charge you money or make a payment on your behalf Mobile transactions are a simple two step scan-andpay process Bitcoins are sent easily through the Internet, without needing to trust any third party Allows exciting uses that could not be covered by any existing payment system How interested are you in using Bitcoin for: Base: Total Respondents (1000); 18-24 (195); 25-34 (310); 35-49 (388); 50-59 (107) 14 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C Appendix: Data from PwC survey on Bitcoin What potential barriers do you see using Bitcoin to conduct purchase/sale transactions? % Highly / Somewhat Concerned Indicate your level of concern to the following statements reflecting potential barriers / concerns to using Bitcoins to conduct purchase / sale transactions. % Highly / Somewhat Concerned The price of a Bitcoin can unpredictably increase or decrease over a short period of time. 83% Bitcoin is an experimental new currency that is in active development, and therefore is unpredictable. 80% Any transaction issues with Bitcoin cannot be reversed, they can only be refunded by the person receiving the funds. 76% Bitcoin is not an official currency. Most jurisdictions still require you to pay income, sales, payroll and capital gains taxes on anything that has value - including Bitcoin. 72% All Bitcoin transactions are stored publicly and permanently on the Bitcoin network, which means anyone can see the balance and transactions of any Bitcoin address. 66% Would be more likely to trust Bitcoin if it were distributed by a well-known third party. 50% Base: Total Respondents (1000) 15 C o n s u me r i n tellige n c e s e r ie s

D I G I T A L D i s r u p t o r : H o w B it c o i n i s d r i v i n g i n n o v ati o n i n E M C About PwC PwC’s Entertainment, Media and Communications practice PwC’s practice works with businesses to address the challenges and opportunities presented by digital transformation, assisting them shift from traditional business models to businesses, brands and revenue streams that leverage digital content and platforms. We work with clients across a wide range of key industry sectors including: television, film, music, Internet, video games, advertising, publishing, radio, out of home advertising, sports, business information, casino gaming, and more. PwC’s Digital / Social practice PwC’s practice helps organizations capitalize on the social, mobile and other digital technologies that are transforming the way business gets done, from customer value to revenue growth. With a strong, customer-centric focus, PwC’s social and digital practice employs a range of solutions, from operating models, to technology models, to technology solutions, to customer data to global social and digital strategies. For questions and comments, contact: Deborah Bothun Principal U.S. Advisory – Entertainment, Media and Communications Leader deborah.k.bothun@us.pwc.com Ben McConnell Managing Director U.S. Advisory – Digital / Social Practice ben.mcconnell@us.pwc.com @benmcconnell Matthew Lieberman U.S. Entertainment, Media and Communications Marketing Leader matthew.lieberman@us.pwc.com Analyst David J. Neff, PwC Digital / Social Strategy Design Eleanor Bartosh, PwC Digital / Social Strategy Social Listening Data Christine Stout, PwC Digital / Social Strategy About the Cover Photograph by Eleanor Bartosh, Copyright PwC 2014. Please contact for creative common licensing. Legal Any trademarks included are trademarks of their respective owners and are not affiliated with, or endorsed by, PricewaterhouseCoopers LLP. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. PwC US helps organizations and individuals create the value they’re looking for. We are a member of the PwC network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Reach out to one of the people in our contact us column to learn more. Copyright / Disclaimer 2014 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for more details. C o n s u me r i n tellige n c e s e r ie s

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